Corporate Governance: Balancing ESG, Sustainability and Growth

Nov. 16, 2020 - Nov. 19, 2020

About This Event

The dynamic between institutional investors, corporate boards, influential shareholders, and the market continues to evolve. Corporations facing the unprecedented global pandemic, nationwide racial protests and increased pressure from their shareholder base surrounding environmental, social and governance initiatives must consider gender, ethnic and cognitive board diversity as they face a wide range of challenges.

Eco-friendly, socially conscious and pro-governance investments have been hailed recently with a surge in focus on ESG initiatives, but sustainability and profitability don’t always go hand in hand. Shareholders want shorter-term returns and tighter spending from corporates, but they also demand innovation and sustainability practices which oftentimes comes at a cost. Companies are faced with balancing short-termism with long-term returns and must be mindful of potential influential investors seeking to exert their influence in the boardroom.

Join The Deal and a roster of senior corporate executives, institutional investors, and corporate advisers for Corporate Governance 2020. This virtual event features four days of online sessions exploring the biggest challenges facing companies today as they shift their focus to more sustainable practices, stronger ESG initiatives and preparing for longer-term risks all while managing customer and shareholder needs.

Corporate Governance 2020 features daily broadcasts of panel sessions and interviews, and your registration provides access to the entire week of sessions. You can view them live as they happen or on demand at a time that is convenient for you.

Agenda

Influential ESG Standards
Activists, Index Funds Shift to ESG

Large passive index fund managers are shifting resources into ESG investing, and some of the most well-known activist investors are doing the same. BlackRock’s Larry Fink is pushing for more climate risk disclosure just as activist Jeff Ubben launched Inclusive Capital Partners to focus exclusively on socially responsible investing. This panel will review the fast-moving transformations underway at both index and hedge funds and evaluate how corporate boards and management teams need to prepare or respond when targeted. Investment horizon and investment manager attention to allocations will all be considered.

Alphabet Soup of Sustainability Disclosures

Companies looking to garner investments from ESG-focused funds have a plethora of possible disclosure options when looking to lay out their plans. Top voluntary disclosure standards include the Sustainability Accounting Standards Board, or SASB; the Task Force on Climate-Related Financial Disclosures, or TCFD; and United Nations sustainability goals in Corporate Social Responsibility, or CSR, reports. Corporations, meanwhile, may choose to complete sustainability reports, which can be interpreted in various ways. What types of requests do corporates receive regarding ESG disclosures? Is there room for a single regulatory framework under a body such as the Securities and Exchange Commission? What are the key points to include in sustainability reports, and how must companies disclose such efforts? How can advisers work with management teams to buy into pro-ESG efforts, enable companies to act differently and execute on ESG-related changes, such as making disclosures on carbon emissions?

Social Responsibility and Boards
Director Choices in a Challenging Environment

As calls for social justice reform cover the mainstream headlines, companies more than ever are being asked to consider the diversity of their boards in terms of gender, ethnicity, age and skillset. Meanwhile, they continue to face never-before-encountered economic issues dealing with the coronavirus pandemic. Amid the turbulence, how has the board selection process changed? Participants seek to evaluate mechanisms for installing directors with diverse and strong business backgrounds and how companies can develop strategies to keep CEOs on their toes amidst the volatile corporate environment. What recruitment techniques are being used to identify diverse director sets willing to challenge executives and encourage critical debate in board meetings? How can activist investors work with companies to add more diversity to boards and into the C-suite?

ESG Funds: Friend or Foe of Boards?

Eco-friendly, socially conscious and pro-governance investments have been hailed recently with a surge in focus on ESG initiatives. Investors and companies, however, may be overwhelmed by a lack of clarity around ESG funds. Do ESG funds invest with a strategy to engage companies on environmental or social themes, or do they have a disinvestment approach, only allocating investments in companies deemed to fit a socially responsible category? How do companies plan for longer-term environmental risks but also stay prepared for shorter-term issues? What are the biggest challenges facing companies making a pivot to more sustainable practices, be it in manufacturing, operations or dealmaking? Among other topics, the panel will review how boards can better prepare themselves to oversee companies and entice ESG-focused investors. What are companies doing to make sure their ESG policies are up to date and in line with shareholder and customer needs?

Examining the Regulatory Landscape of ESG
Shifting Regulatory Landscape

With the 2020 election in the rearview mirror, regulation remains top of mind for investors, advisers and companies. From disclosure regulations for large investors to measures expected to hamper company-investor communications and transparency, the continued shift in regulations has posed governance-related challenges to companies, activists and institutional investors’ funds. Policy experts are closely reading the tea leaves on the results and their effect on a wave of new restrictions affecting governance and activism. This panel will review how policy changes are impacting how companies engage with their investor base. The panel will also review the effectiveness of stock surveillance systems, shareholder proposal rules, proxy plumbing restrictions as well as tough rules targeting proxy advisers and their effect on ESG investing and activism.

Labor Department Complicates ESG

The Labor Department’s draft ESG rules will try to make it difficult for employers to offer 401(k) plans with access to ESG funds. The argument has been to “chose investments based solely on financial considerations” and that 401(k)s are about retirement savings rather than “political,” issue-driven investments. Backers of ESG funds, however, contend pro-ESG funds outperform the markets and lower an investor’s risk. This panel will review the DOL’s effect on the growth of ESG investments.

Practicing What You Preach
CEO Pay and the Election

Policymakers are taking a closer look at both Covid-19 and the 2020 election’s effect on executive compensation and corporate board oversight of pay practices. This panel will review how the Securities and Exchange Commission views executive compensation rules, including those proposed and enacted by the Dodd-Frank Act. Will regulators roll back say-on-pay vote requirements or implement a handful of statutorily mandated CEO compensation rules that have yet to be adopted? Will activist investors put corporate boards with big negative shareholder votes on executive pay in their crosshairs? With the election in the rearview mirror, what kinds of CEO pay plans will be deemed appropriate? How is the coronavirus pandemic affecting CEO pay?

Prioritizing Shareholders, Customers and Employees

The term ‘stakeholder’ capitalism became a new buzzword for corporate activity, after the Business Roundtable last summer issued a statement in which CEOs committed to “deliver value for all stakeholders,” not just shareholders. This panel will examine how the needs of a company’s management team align with the needs of those on the floor or those of customers. It will review the way companies enact sustainable and profitable practices without short-changing customers. The panel will also examine how companies manage shareholder concerns and sustainable practices and explore correlations between employee morale, share performance and customer satisfaction. Activist investing is also often in the mix, with insurgent managers often targeting corporate capital expenditures and second-guessing management decision making on key investments. Panel members will review the types of operational tactics often employed by activist managers.

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